In Sudhanshu Mohapatra v. DDIT (IT), a division bench of the Kolkata ITAT held that salary of a Non-Resident Indian from foreign employer in respect of his services rendered outside India is exempted from income tax if he produces evidence showing that he was outside India for more than 182 days during the relevant assessment year.
Assessee, in the instant case, earned foreign currency from his employer outside India and claimed exemption such income as Non-resident Indian. Assessing Officer rejected the claim on ground of non-production of evidence to show that he is a non-resident.
On appeal, the first appellate authority also rejected the claim and held that any income received by non-resident of India is taxable in India for the reason that the salary was received in India.
Before the High Court, the assessee relied on the recent decision in Utanka Roy Vs. DIT, International Taxation Transfer wherein the Calcutta High Court held that salary of an Indian citizen, working in a foreign ship & rendered services outside India for a period of 286 days is exempt from taxation under section 5(2) of the Income Tax Act, 1961. He further relied on a recent issued by CBDT which specifically excludes the salary of a non-resident seafarer on account of services rendered outside India in a foreign ship from income tax net.
The division bench of the Tribunal noticed the above decision wherein the Court held that assessee must be treated as non-resident in respect of his services rendered outside India. In the above case, the assessee therein rendered his services outside India for a period of 286 days.
Relying on the above decision, the bench observed that section 6 of the IT Act lays down the conditions for treating a person as non-resident. As per the section, where any person claims to be treated as non-resident one must show that stay outside India for more than 182 days.
“In the present case, we find that the assessee could not produce anything before any of the authorities by showing any evidence that he is non-resident having rendered his services outside India for more than 182 days. Accordingly, the facts of the Hon’ble Jurisdictional High Court of Calcutta in the case of supra together with the said CBDT Circular as relied on by the ld.AR of the assessee before us are not applicable to the present facts of the case. Thus, we find force in the submissions of the ld.DR. In such circumstances and in the interest of natural justice, we restore the issue to the file of the AO for a limited purpose to find out whether the assessee is a resident or non-resident in ITA No. 452/K/16 Sudhanshu Mohapatra terms of relevant provisions of the Act. The AO is directed to pass a fresh order as per law after giving the assessee adequate opportunity of hearing to the assessee. The assessee is at liberty to file requisite evidences, if any, to substantiate his claim properly.”
Read the full text of the Order below.
